Can I file for bankruptcy if I have equity in my home?
Can I file for bankruptcy if I have equity in my home?
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Using a Bankruptcy Lawyer - Find out if you need a lawyer and how to pick a good one.
Chapter 13 Bankruptcy - Options for homeowners and filers with high income.
Process of a Bankruptcy Case - Find out what's involved in filing a bankruptcy case.
Property and Exemptions in Bankruptcy - Find out how your property is (or is not) protected.
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Your Car in Bankruptcy - Learn about your options to keep (or surrender) your car.
Using a Bankruptcy Lawyer - Find out if you need a lawyer and how to pick a good one.
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Answer: (1)
The fact that you have equity in your home will not prevent you from filing bankruptcy, if you are otherwise eligible to file.
However, if you have lots of equity in your home which is not protected by a homestead exemption, and you file for Chapter 7, the bankruptcy trustee may sell your home to repay your unsecured creditors.
Even if your equity is protected by a homestead exemption, Chapter 7 won't prevent the eventual loss of your home through foreclosure if you are behind in payments.
In Chapter 13 bankruptcy, on the other hand, you keep your property, including your home. However, in order to prevent foreclosure, you must stay current on your mortgage and make up any arrearages through your Chapter 13 plan.
For more information about what happens to your home in bankruptcy, options for keeping your home, and how to avoid foreclosure, see the articles in Your Home in Bankruptcy.
Posted by Staff Attorney on 03 Jun 2010